Cyprus Gas Findings Prompts International Interest
The recent announcement by the Government of Cyprus that a gas find by Noble Energy in Block 12 offshore Cyprus could be worth around 100 billion has prompted international energy investors to take a closer look in the region.
One interesting development in that respect is information pointing towards an increased Russian interest.
When Noble Energy participated a few years ago in order to acquire the rights to undertake research drilling in Block 12, there were only another three companies interested. Contrast that to the current situation, where the positive findings have prompted the interest of upwards of 40 international energy companies to compete for the remaining 12 offshore blocks in Cyprus' exclusive economic zone.
Gazprom, Exxon Mobil, and Total are amongst the multinationals that are already in informal talks with Cypriot officials.
The Russian interest seems more developed at this period taking into account the close relations between Nicosia and Moscow, with the latter providing recently a 2.5 billion Euros interstate loan so as for Cyprus to cover a large segment of its financial needs for 2012.
According to the Energia Consulting, Cyprus and Russia have informal agreements, whereby Gazprom is being promised to acquire at least one block to undertake exploratory drilling.
Moreover, the Cypriot press has noted that Gazprom has bought property in Cyprus and specifically in the port of Limassol, worth some 10 million Euros, in order to construct its regional Cypriot offices , a development that indicates the company's interest to become especially active in natural gas research in the Eastern Mediterranean region.
Another interesting aspect is that four out of five permanent members of the UN security council (except China for the time being), have energy companies interested in Cyprus offshore resources. The available information to date indicates that the Cypriot government will try to accommodate the wider political interests being formed, by allowing all these countries to gain access to its exclusive economic zones, amid heightened tension by Turkey which has strongly objected to the exploratory drilling.
The second phase for the provision of further research rights in the Cypriot onshore blocks is set to be finalized by spring 2012.
During the interim period, Noble Energy will announce its finalized assessment on when production can begin in the Block 12. Speculation points to 2018, though no determination has been made as to how natural gas will be transferred to the international markets, although certain propositions including LNG stations or underwater pipelines; have been announced.
The recent announcement by Noble Energy has served to restore confidence in the Cypriot stock market which suffered due to the global financial crisis.
It appears that the "Natural gas fever" taking hold in this island of 800,000, will have beneficial outcomes in adding a significant new industry to an economy which has traditionally relied upon tourism, shipping and banking.